Ring out the old, ring in the new!
We thought 2013 was busy with the introduction of Real Time Information (RTI). Looking back it now seems a doddle, but ever a hope that the wrinkles will disappear along with ‘disputed charge’, ‘duplicates’, and ‘misbalance’!
2016 is proving to be one of the most substantial change years ever for payroll, software and service providers and especially payroll managers. Never before have I seen such a wide, heavy plethora of change. The majority impact from April 2016, but New Year seems a good time to start the preparations in earnest and put the brain in gear.
So in traditional terms we ‘ring out the old’ with the abolition of Contracting Out National Insurance Contributions (NICs). The ECON (Employer Contracting Out Number) and SCON(Scheme Contracting Out Number) are not more. No reduction in NICs for those who are part of a Defined Benefit pension scheme. Employees in such pension schemes now face a 13.2% rise in their NI bill along with the employer facing a 32.7% rise. Will employer and employee contributions to the scheme drop to offset those rises?
And the new tax year sees us having to ‘ring in the new’.
One of the biggest changes (or is it really the smallest) is the real use for the first time of the ‘S’ prefix tax regime indicator on tax codes for those who are considered to be a Scottish Tax Payer. The indicator is critical in relation to the finances of the Scottish Parliament.
Introduced is the new Apprentice Under 25 NI letter H (with G for mariners). Employers no longer pay secondary NIC up to a new Apprentice Upper Secondary Threshold (AUSC).
Employment allowance rises to £3,000 and at the same time is denied to single director companies.
A new higher Direct Earnings Attachment (DEA) for those who have fraudulently claimed benefits and revised tables for Scottish Earnings Arrestment.
Plan Type 2 collection of Student Loans start with further proposals for new concurrent Plan Type 3 (first deduction from April 2019 at 6% above the £21,000 threshold). The New Starter Checklist questions have been revised to enable employees (whether they present a P45 or not) to declare the plan type applicable.
The Full Payment Submission (FPS) has been revised to enable employers and pension companies to indicate and report amounts that have been paid (taxed or tax free) in relation to Flexible Drawdown or for Death Benefit payments.
The Home Office is motoring in partnership with the Department of Work and Pensions (DWP) in streamlining the process of issuing a National Insurance Number (NINO) to migrant workers (the NINOis printed on some newly issued Biometric Residents Permit – the BRP).
The Office for Tax Simplification (OTS) proposal that P11D should not be required where an employer is voluntarily payrolling benefits in kind becomes a reality for Employers who register before 6th April. The regulations are considered so wide that the majority of current methods of payrolling will comply. Excluded are accommodation, loans and credit vouchers. April 2017 will see the introduction of a new method of reporting car benefits where they are also payrolled!
We also see the 50p premium above the standard National Minimum Wage (NMW) with the launch of the ‘Living Wage’. So following the uplift in NMW last October, employees of relevant age will see a further uplift. Future rises are expecting to align with the start of the new tax year. Recent rulings on uniform purchase have also hit some retailers policies of requiring employees to buy their own employer range clothes for wearing on the shop floor.
And into the future we see the proposed introduction of the Apprentice levy of 1/2% for employers with a ‘Pay Bill’ over £3 million. There is much to be considered and worked through on how the policy will work, especially for multi payroll employers across multi pay frequencies and also the impact on seasonal working such as agriculture and leisure. ‘Pay Bill’ Is not yet defined but is indicated potentially as being the same earnings National Insurance (so excluding anyone not subject to Class 1 NICs).
And then there are the ever changing requirements on the calculation of holiday pay…